Call it piling on, if you will.

Tiny United Christian Credit Union of Pulaski County, in Little Rock, Ark., was sinking fast.

With just $11,600 of assets, run by part-time volunteers and only a post office box as a mail drop, the credit union was already struggling to pay a $2,700 fine levied by state regulators.

Then along came the feds -- the National Credit Union Administration in this case -- who had regulatory authority over this state-chartered credit union by being its deposit insurer.

The federal regulator worked with the tiny credit union for two years to get its financial records in order so the credit union could file its call reports, as all federally insured financial institutions must do.

But United Christian still failed to file, in one case going eight months without doing so.

Finally the regulator gave up on United Christian and lowered the boom -- a $15,000 fine for failing to file the semiannual disclosures.

The fine, of course, which exceeded the total assets of the institution, was too much, and ended up forcing the credit union out of business.

Friend in a High Place

Not even the intervention of President Clinton, the state's governor at the time, could save the little credit union. Calling on the ties of the local community, United Christian, which served 30 churches in the Little Rock area, subpoenaed the governor to testify on its behalf before anadministrative law judge.

The President, however, was involved in a campaign at the time, and was too busy to testify. So he sent an upper-level aide instead.

The administrative law judge was so impressed, it seems, that he levied a fine of $1,000 for each day the credit union was late on its call reports -- a total of $51,400. Upon reflection, the credit union administration board chose to reduce the fine by two-thirds.

End of the Line

As it turned out, the reduced fine was too much for the little credit union to bear, and state regulators were forced to shut it down.

Officials with the federal regulator insist their intention was not to force the credit union out of business. They point out that they worked with the credit union's officials for two years and even assisted them in arranging a system to allow them to file proper and timely call reports.

Don't ask me what the moral of this story is, but it probably has something to do with evolution and the future of such small financial institutions in this world of growing financial sophistication and regulatory requirements.

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